Nevada state Sen. Don Gustavson, R-Sparks, smells a sample of marijuana, Friday, March 24, 2017, as Christopher Price, a ''budtender'' at the Blum medical marijuana dispensary, describes the operation during a brief tour a the store on South Virginia Street, about a mile south of the main casino district, in Reno, Nev. A Las Vegas Democrat is seeking to start recreational marijuana sales in Nevada at least a few weeks earlier than currently planned, in mid-June. (Scott Sonner, Associated Press)

Nevada liquor lobby battles medical marijuana distributors with July 1 sales start at risk

Update 4:45 p.m. MT:
A judge won’t throw out a lawsuit from a powerful liquor lobby that wants a piece of Nevada’s new recreational marijuana industry.

A group of independent liquor wholesalers say the ballot measure that voters approved last November legalizing recreational pot makes it clear they’re the only ones that can distribute the product for retail sales scheduled to begin July 1.

State lawyers tried to persuade Carson City District Judge James Wilson on Tuesday to dismiss the lawsuit and allow existing medical marijuana dispensaries to serve as their own middlemen in recreational sales.
Wilson refused. He left in place an order he issued May 30 that blocks any licensing until he holds a daylong hearing next Monday.

CARSON CITY, Nev. — If Nevada officials have their way, tourists and residents alike will be smoking pot ahead of Independence Day. But before recreational marijuana launches in the state best known for slot machines and showgirls, a judge must decide who has the right to distribute what promises to be Nevada’s newest cash crop.

The powerful liquor lobby and state-regulated medical marijuana dealers are fighting over who should be licensed to distribute marijuana from growers to retailers. Nevada is the only legal pot state in which alcohol distributors were given the first shot at distribution licenses under the law that voters approved in November.

But the state says it determined that interest wasn’t high enough among alcohol distributors, so it has the authority to allow existing medical shops to provide pot to retailers already qualified to sell it. That system would be used until permanent regulations are put in place Jan. 1, 2018.

The liquor distributors sued last month, arguing they get first dibs.

The legal battle comes as the state aims to launch recreational pot sales at existing medical marijuana dispensaries July 1.

Carson City District Judge James Wilson sided with the distributors on a preliminary basis last month, temporarily blocking licensing of pot distributors. He has scheduled a hearing on the matter Tuesday.

“The statute clearly gives a priority and exclusive license to alcohol distributors, in order to promote the goal of regulating marijuana similar to alcohol,” Wilson wrote May 30.

Chief Deputy Attorney General William McKean said in a motion to dismiss the lawsuit that “it is of the essence to have this matter resolved,” with the Nevada Department of Taxation aiming to begin issuing licenses for recreational pot sales next month.

Kevin Benson, a lawyer for the Independent Alcohol Distributors of Nevada, said the tax department exceeded its authority when it decided there wasn’t enough interest among alcohol distributors to provide the number of marijuana distribution licenses needed to get the program running by July 1.

“Nothing in the statute requires that the program start on July 1,” Benson wrote.

He said the state’s action “illustrates the fact that the entire process was rushed to the point that it was intentionally designed to prevent alcohol distributors from having a fair opportunity to apply and qualify for an exclusive license.”

The Nevada Cannabis Coalition said alcohol distributors are complaining that they are not being guaranteed a monopoly over marijuana distribution. It says any delay in licensing could cost the state millions of dollars a month in tax revenue targeted for schools.

The wholesale excise and retail taxes signed into law this month are projected to raise $120 million in revenue over two years.

In other legal pot states, Colorado bars people from holding both alcohol and marijuana licenses.

Washington didn’t have a medical pot program before legalizing recreational marijuana and now requires all pot business to be licensed by its state Liquor Control Board.

Oregon initially allowed medical dispensaries to sell recreationally, but now has a separate Oregon medical program, with recreational pot regulated by the Oregon Liquor Commission.